The Two Year Anniversary Of "China's Ghost Cities" Epic Keynesian Fail

Two years ago we first covered the flip side of the Chinese real estate "boom" story by presenting the ghost city of Ordos. Today, on the two year anniversary of China's Keynesian miracle being exposed for the whole world to see, Al Jazeera goes back to Ordos to see if anything has changed. And while Paul Krugman may be shocked, shocked, that the Keynesian approach of building for the sake of building does not work not only in the US but pretty much everywhere, it will be no surprise to anyone, that as Al Jazeera concludes, "it's still pretty quiet, but here's the remarkable thing - the building has't stopped, somehow people are convinced that if you keep building, people will come. If not in a few years, then... eventually." And somehow we keep bashing the Fed as the only source of Einsteinian insanity, when it is the same cretins from the Princeton economics department in both the monetary and fiscal arena, who know one thing and one thing only - do whatever ultimately fails, just keep on doing it.

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I really have to reserve judgement here because I really think this is the long term view the Chinese are known for. This looks terrible no doubt but at least there isn't any real decay. Time will tell.

Oh, there is lots of decay, even in a mere two years. For some reason they selected to shoot where the decay was not very obvious... not sure why. Of course, do remember that dwellings (and pretty much everything else) in a desert do degrade more slowly than in more wet and humid locations. Not long ago there was a similar video article that was shot at one of the EMPTY large malls in this "city", and the evidence of wear and tear was very evident and sometimes quite ugly.

From the perspective of someone with lots of real estate maintainance experience this is very bullish <sarc>. Not only is there construction but guards to keep thieves out, maintainance workers, pest control, road maintainance, much of what is needed to keep any city going. If they don't keep pouring money into these places they will be ruins in no time. What a joke.

Orzos is a strategic investment to protect the main river from Mongolian (Russian) influence. Perhaps they will run gambling halls there, or world expos, or relocate hundreds of thousands of non-essential government workers there from Beijing. The point is, Chinese government wants to populate that area for a reason.

Just like Israel building "settlements" in gaza to populate with their own religious zealots and US did with homestead act to populate where native americans used to be.

finally, someone gets it right. further to that point, imagine you are running a country that is going through a massive, protracted privatization of state assets - which is basically what China is doing - and you want to maximize reinvestment rather than seeing funds simply flee the country to the US or elsewhere, what do you do? backstop real estate. clearly, there are those who are extracting their wealth for better zip codes but the majority is staying as reinvestment.

Chanos et. al. don't get this because they can't see things from any other point of view other than western-style capitalism. i am not making a case for investing in Chinese construction (or any Chinese assets for that matter) but it's pretty clear that China's appetite for raw materials is not cooling off.

And one of the keys to the longevity of Chinese civilization has been long-term, central planning.

Why would Beijing have empty cities built in arid regions?

I presume it has more to do with planners in Chinese military command centers than in their banking centers. Remember the latter is subservient to the former. China is still a military dictatorship regardless of what wool has been pulled over the West's eyes in recent decades.

You see....extra cities come in handy if you expect to fight w/Russia in a global nuclear war with the West:

Now think of this....through neo-mercantilist state policies, China has effectively stolen the technological base and means of production from the West. The communists have proven to be better capitalists than the capitalists since the former plans for the long-term while the latter pursues short-term profit at the potential expense of the entire future.

Checkmate draws near. I wish I could flip the chessboard in the face of the 'Old Enemy', but alas no one seems to be on my side.

Well said. This isn't the blog for geo-politics of this kind. Many people get this strange delusion that China and the US are similar in many different ways. They forget that the US is now the largest debtor nation and that China is a huge creditor. Even if this is a mistake they can afford it to an extent. The Chinese a have different conception of time in contrast to Americans ADD. Look at the 24hr newsflow: Ipads, Lady Gaga, Hurricane Irene, Michelle Bachman. etc etc

"But golly gee....the Chinese wouldn't want anything bad to happen to us because who then would buy their goods?"

Funny, actually just plain tragic, that there's Westerners who actually think this. China doesn't need us anymore. Western demand simply acted as a means through which to garner our technology and manufacturing base. Now they can produce for their own populations.

As for our populations, well....the writing has been on the wall the whole time:

"The Capitalists will sell us the rope with which we will hang them." - V. Lenin

Our economic dependency is a weakness, even if our leaders fail to understand just how irrelevant money is to Beijing in the context of final victory in global Real Politik. In other words, the money is important to us....not them. That's why China's busy hoarding natural resources and rare elements....nevermind factories and extra cities for housing mass populations. They are stockpiling for the future while we've spent ours.

Though there *might* be conflict at some point; it is quite a ways off from now. One of the primary capabilities of any military is force projection. Now, look at China and Russia, do you believe they have that ability? China has no Navy to speak of and Russia hasn't really kept up either. In a head-to-head match, even 10 years from now, the abuse that both China and Russia would suffer would be epic. And to think it would be nuclear? Yeah, that really would be the "end of the world as we know it."

You know not what you speak of (nor does the blogger you linked to)...

You, sir, do not know what you speak of. Are you Western intelligence and/or military? After all, it's the arrogance and stupidity therein that is one of the primary sources of our undoing.

As for force projection, that's been in place the whole time in recent decades. It's called strategic nuclear arms. Russia and China have been thinking about fighting and winning a global nuclear war the whole time while the West has been hoping that MAD would keep us safe. That's mad alright.

There's a reason the Chinese are building spare cities in remote areas and the Russians are building city-size bunkers under the Ural Mountains:

I wish you were kidding but I know you're not. See my post above with the quote:

"But golly gee....the Chinese wouldn't want anything bad to happen to us because who then would buy their goods?"

China has plenty of its own potential consumers, i.e., the CHINESE PEOPLE. As for over-indulgent, stupid Americans....we've served their purpose. Consequently, we all might want to live under a rock relatively soon.

The U.S. has 18 Ohio-class submarines, of which 14 are Trident II SSBNs each capable of carrying 24 SLBMs.

Each Trident II SLBM carries up to eight W88 (475 kt) warheads (Mark 5) or eight W76 (100 kt) warheads (Mark 4). The Trident II can carry 12 MIRV warheads but START I reduces this to 8 and SORT reduces this yet further to 4 or 5.

I expect START I will go out the window in a New York Minute if shit starts.

Realize, that's just the missiles on the subs.

The total number of nukes at the USA's disposal (ready to go right now) is 2,200. In addition, "Around 4,225 warheads have been removed from deployment but have remained stockpiled as a "responsible reserve force" on inactive status."

Forgive me if I'm not so sure China and Russia want to attempt 'winning a nuclear war' with the USA.

That's 2200 down from over 20K+ in the mid-1980's. Russia was able to eliminate 90% of our strategic nuclear potential by waging false peace. The dividends from this tact are wearing thin, so I presume the rest of our capability will be eliminated the hard way.

Yeah, they'll be fighting with Russia alright - but not along side them.

You give the Chicoms and their larceny far too much credit. America is wounded and has a chance to heal. A country like China that relies on foreign souces of raw materials, theft of ideas from other countries, and slave labor will have a sugar high for a while.

And what's this about American Capitalism ? Ya gots ta read ZH more often. Free market capitalism is sooooooo last century !

Wooden houses in arid and dry regions are rather suscpetible to ignition from stray radiation(such as from any nuclear detonation within 50 miles). Concrete bunkers would be a better deal if build something for involvement in nuclear warfare.

And said wall utterly failed to keep out the Mongols in the 14th century and the Manchus in the 16th century.

So it didn't do shit beyond increasing GDP (Krugman approved!), helping the emperor feel like his tiny dick was actually of adequate size and keep people too busy to realize what a fucking he was giving them.

Not to mention China's biggest problem, their ovaries and testicles, 1.2 billion people and growing in spite of the one child laws, and you think we have a demographic problem in the USA following the baby boom? This alone is a global catastrophe waiting to happen. For now they have been able to buy the commodities they need while food is relatively cheap, but in the shit storm to come food will no longer be as cheap as it has been, and in a global depression they will not have the balance of trade payments they have grown used to. What happens when they cannot buy the food they need? Or have a major harvest failure? China is only 12% arable land to start with, compared to the US at almost 50%. Do you think they will simply sit by as millions starve and hundreds of millions go without food and work? Why do you think they are building those aircraft carriers? To send a message to the US Navy about Taiwan? Lot cheaper ways to that. The first one has had it's first sea trials and is ready for duty. They also just finished refurbishment of a Soviet carrier, and are starting construction on a larger carrier. China might not be able to project much power outside for now, but it will not be long before they have a regional powerhouse of military force, by the time you are elderly it will be a global force and we will be unable to do squat about it.

Towards the end of the Ming Dynasty, the Great Wall helped defend the empire against the Manchu invasions that began around 1600. Even after the loss of all of Liaodong, the Ming army under the command of Yuan Chonghuan held off the Manchus at the heavily fortified Shanhaiguan pass, preventing the Manchus from entering the Chinese heartland. - Source: Wiki.

Meaningless. If you're under the assumption that Chinese banks have more off balance sheet garbage than lets say... JP Morgan's derivatives book then I've got some BofA stock for you as a long term strategy.

I saw green shoots in the video! -- Johnson grass growing everywhere in the city.

The story I've heard is that, after this year's earthquake and tsunami, a lot of Japanese bankers and corporate executives have bought properties in the southern Chinese province of Hainan. (For some reason, the upper echeleon of Japanese society does know that most of their country is under constant lethal radiation. Ordinary Japanese folks, however, still buy whatever official crap the government tells them). While the Chinese are continueing their Keynsian experiment without much foresight, the empty houses might eventually be filled due to Japanese immigration

WHAT longterm view? For most of history, China's "long term" strategy has been suicidal!

I have NO idea where this myth of devious asian strategic superiority comes from other than outright racism. There's no rhyme nor reason in what china has done...is it longterm planning to pollute their entire country nearly to the point of uninhabitability???

China has never dominated nor taken over the world, nor will they this time, asian chauvinism notwithstanding

Look, the Chinese as well as most of the Western world's leadership believes in a false religion. That religion is keynesianism. Governments all like it because it gives them unlimited interventional power. It's funny but atheist like to deride any and all religions. Yet, the theories of keynes have been repeatedly proven false and are adhered to to this very day. You think religious people have faith? They are nothing compared to economists and governments. These empty Chinese cities are a product of stupid central planning and the false equations of GDP. They might as well dig holes and fill them in. That raises GDP, too. These cities are the actually the same thing.

Investing in these properties is NOT the same as buying gold to store value. Gold has long established demand. These properties and cities have no demonstrable demand as evidenced by the fact they are and have been empty for years.

The entire damn world and it's productive resources are enslaved by this idiotic and false economic theory. I hope 500 years from now we have thoroughly debunked and trashed these ideas.

Well, I don't know about the gold comparison (okay, okay, it's bullshit) but that isn't a Keynesian failure. That's a product of China amassing vast quantities of capital and needing somewhere to put it.

And as China gentrifies, all of those houses will retain their value. With a billion plus people you'll have to build a hell of a lot more housing to have a negative housing demand shock.

Not too familiar with the downside of gross misallocation of capital, eh SE? USSR was a booming place once too, you know, the state knowing better how to deploy capital than the markets and all right? LOL

Housing and infrastructure in a rapidly developing economy that is rapidly urbanising and is expected (by virtually all metrics) to have increased urban housing demand is hardly the misallocation of capital. It's not optimal (using up all those dollars buying productive assets and bribing OPEC would be better) but it's superior to holding it in ever-depreciating fiat/treasuries/eurobongs.

China is the world's greatest industrial behemoth. It controls the world's supply chain (components, etc), controls important resources (rare earths) is the spider at the heart of global trade, has amassed a vast array of patents and is increasingly a global player in energy markets (Venezuela, the state with largest proven oil reserves is a Chinese proxy).

If you think China has problems with a misallocation of capital you should look to the United States that has destroyed its labour force, destroyed its supply chain and is totally dependent on global energy & oil infrastructure.

(One of my family's businesses has a factory there, so while I haven't been personally, members of my family have a ground-level understanding of the business conditions)

Look, I'm not saying that central planning isn't shambolic. I'm not saying there isn't a hell of a lot of mess and bullshit in China. It's mostly a bullshit country for Western investors (for every Silvercorp there're ten Sino-Forests), and a bullshit country for Chinese labourers. But none of that invalidates my points: it's the world's greatest manufacturing behemoth, it controls the world's supply chain, and it increasingly controls a lot of resource and energy infrastructure.

Tom Friedman is still a moron, investing in China is extremely risky, but in the great game of global power the Chinese government have totally outfoxed the West, and will reap the rewards.

The problem with the Chinese is that they aren't exactly the greatest innovators. Sure, they can take our technology and processes and implement them; but what about improvements? The Chinese educational system is a disaster and churns out mediocre graduates that cannot compete with the West. Of course they have brilliant people as well. And they are the ones sent to study in foreign Universities.

The benefit of China is their abiity to leverage a massive population to perform menial labor. In reality, most of the work they perform can be fully automated (through Western ingenuity).

I have been there many times and admire much of what they have accomplished. And just like people everywhere; there is good and bad. They can't match the West, not now, not 20 years from now. Not saying to discount them just that they have a long way to go and the West isn't going to be standing still either. Hopeful for peace but always prepared for war. The big stick analogy...

They trust American businesses more than any Chinese owned or those based in China.

That's 3rd world for ya. Where government will sponsor your business to lie in order to attract foreign capital and get rich at the cost of honest businessmen in more advanced and costly countries. There is no short cut in life, so ask yourselves why emerging economies are cheap? pollution, slave labor, straight up lies about profits.

vietnamese and other asians don't want chinese poison toothpaste and junk electronics either. They don't trust the chinese. the chinese have had to try to hide country of origin of many of their products because it is considered a producer of dangerous, shoddy goods.

You make some interesting points. I recognise that China (in general) has more of a deferential culture, and less of an entrepreneurial and innovative culture.

This served China very poorly last century with the Qing collapse. But this century — in mobilising huge manufacturing hordes — it serves them very well.

In education they (massive generalisation) churn out competent (or sub-competent) engineers and architects and we churn out "innovators" — but so much of that innovative energy today goes to humanities and the "creative" industries (rock & roll & photoshop), or (as we saw here in England last month) in creating an underclass who feel and entitled and "too good" to work in low-paid labour, and instead just live a petty criminal lifestyle.

Is Apple a Chinese or American company? Niall Ferguson would say it was a Chimerican one, but I am a fundamentalist. Too much value is put on intellectual capital, when the economy is much more nuts and bolts than that. Most of the supply chain — right up to the global consumer — is in China.

And the development of the American service economy (subsidised by cheap Chinese labour) has put the nuts and bolts in the hands of the Chinese, which has allowed them to amass a vast pile of capital, and made the American government finances quite dependent on them buying American debt. If the unfriendly great powers of Eurasia (Iran, Russia, China, Pakistan) got together tomorrow with OPEC to price oil only in gold and RMB, and stop buying treasuries it would be a very dark day for America. That's the cost for America putting too much value on services, too much value on intellectual capital, and too much faith in assholes like Thomas Friedman selling the idea that the world can be flat, and that that can be good for America.

The big stick thing... Mutually assured destruction means that China can do whatever it likes (trade war, ditching treasuries and the dollar, leaning on Eurasia to price oil in gold) and America can't do shit about it — they could make Saudi Arabia stop selling them oil, but China has Venezuela, Iran and Russia in their corner. My main reading these past few weeks has been geostrategic stuff. A conventional war between China and America would be a very long, gruesome stalemate.

It is true the West needs to move away from soft degrees and regain the lead by producing engineers and scientists in numbers approaching those of lawyers. That would be a good start.

"The big stick thing..." Well, I believe another gentlemen said it best "...it may be our dollar but it's your problem..."

As in a discussion with another member, China does not have the ability to project force. It could not establish any sustainable force in any country distant from its homeland. And if by some miracle they could (the west completely asleep at the wheel) they would not be able to supply that force. I am not suggesting the West is omnipotent, I only speak of the current reality. I doubt we will get to that point or that there will be a surprise attack (lol) but if... well, history may not repeat but it certainly rhymes...

ok...in the time it has taken to build China into a manufacturing center, how much of the innovation and invention has migrated anywhere else?

The shit people want is still invented HERE. Has been for 100 years; the west has a stranglehold on that.

In 20 years, we could build India or Vietnam into China and leave them with shit. As far as supply chains go; they have no Navy, they control nothing. Pipe that oil from Venezuela? LOL.

The only refineries on earth capable of refining the taffy they call crude from there are on the Gulf Coast. Think about what that means in terms of energy policy for a second.

As long as China steals from everyone else, they cannot be taken seriously. A conventional war between the US and China would be over with in probably a week if we really decided to do the damage we're capable of. We can bring our forces to their shores, land them, dominate the sky, and sweep across vast swaths of their country. What can they do? Zip.

China is not a friend. I find it uttely mind blowing why the US would invest in that place giving away all the trade secrets. This has to be driven by an outside force. Something beyond the control of its populace. It is as though, the drones in DC are being manipulated. The federation is at stake and you people are eating grubs. Let the PLA negs begin.

The American raison d'etre in a conventonal war between China and America would be to remove the CPC from power (and restore the KMT? LOL) and restore the global supply chain to serving America's interests. That would necessarily mean a ground invasion of the Chinese mainland, and — even if that was successful — an occupation of the Chinese mainland.

If America were beaten and humiliated by the Vietcong, humbled in Afghanistan, and bogged down in Iraq, what the fuck do you think the Red Army (+Russia+DPRK+Iran+Pakistan) would do to America, (and their allies India, Japan, etc)?

America is totally dependent on global oil infrastructure. The second the war started, the American economy would completely tank. China's pipelines from Iran and Russia would keep working fine...

The only way America can incapacitate China is with nukes, which is completely counterproductive, because the Chinese mainland is producing a huge chunk of America's economy.

Before the Enlightenment, Europeans were among the most backward people in the world. Most of Europe's progress during that time came from inventions, innovations and technology imported from the East. It took nearly 200 years of borrowing from the East before the West was developed enough to proceed on it's own path. And this is the age of sailing ships and horse drawn carriages.

In the Age of the Internet, how long do you think it will take for the Chinese to catch up and pass us?

Every race has contributed or built upon the accomplishments of others. So what. It's what came after that. Did you continue to innovate? Did you develop repeatable processes through scientific discovery (West)? Or are you now in the game of stealing from others? That is the current game for the Chinese. That is not innovation.

I don't discount their ability (and with 1.3 billion people there has to be a nugget or two) but they aren't going to pass us unless we continue this silly game of globalization. Given the competition for global resources, I'm betting that game is at an end. You?

this is complete nonsense. The shit invented in the west was not stolen from the fucking East. China is NOT The Middle Kingdom. Calculus was not stolen from China FFS, and Greece and Rome invented FAR more than China. Much of what Rome had was not equaled anywhere until the 17th or 18th century and some not until the mid 1800s.

China will not catch up and pass because white men have a disproportionately high representation of geniuses (and retards). Our IQ bell curve has fatter tails. The reason things happen when and why they do over centuries is not accident except by a genetic accident that predates us all.

China's innovation was 2000 years ago. Egypt's was 4000. Are we going to expect the egyptians to catch and pass based upon ancient achievements? You sinophiles are retarded and racist.

Calculus was not stolen from China FFS, and Greece and Rome invented FAR more than China. Much of what Rome had was not equaled anywhere until the 17th or 18th century and some not until the mid 1800s.

I don't see any evidence behind your assertion.

China will not catch up and pass because white men have a disproportionately high representation of geniuses (and retards).

If I were to agree with your premise (which I don't), I would place you firmly in the retard camp. What amazes me is how you actually manage to say something stupider in each and every post.

China's innovation was 2000 years ago.

Some yes, but it continued right up to the Ming. What's your point?

Egypt's was 4000.

4000 years ago, Egypt's population was black. Doesn't that contradict your claim that black people have never built anything?

I'm not saying that Europeans have invented nothing, nor that the Chinese invented everything. If you think I am, you might want to work on reading comprehension as a first step to correct your neurological impairment.

You, on the other hand claim the opposite. i.e. that everything was invented in the West, that black people have never built anything, that Asians never created anything. Your comments reflect you perfectly: a lazy, self-important, moron who claims superiority based on the achievements of others who happen to share a single DNA strand.

Well, you would certainly know about destroying labor. At least our unemployed labor knows they have to go back to work one day. I don't believe you are English either mate. BTW FT beats WSJ in my book.

Yeah, England has many (most) of the same problems America has. It's some fucked up shit, and most of the bad shit that America can expect England can expect the same. We have no supply chain, we have to import a lot of food (America doesn't have this problem) and we're totally dependent on global oil. That's why I bought a lot of silver, solar panels, water purification shit, storable food, and grow most of my own food.

I'm sure there's no better use for that capital than building ghost cities where there are no jobs and little water. How about updating their existing infrastructure or modernizing their coal powered plants?

I think the Chinese expected the middle class to grow faster and taht they would be able to sell the housing. The demand is there - they just don't have enough people to afford the housing. Their middle class is growing but my guess is inflation and other costs make the housing too expensive for most Chinese.

This someday might work out sort of for China but in the USA it is worse. Get this - in AZ, Las Vegas, CA and other places - they are building new houses. There is ENDLESS supply but apparently homes that were finished in 2008, 2009 - no one wants them. Supposed "Buyers" They want new homes that are NOT in ghost town suburbs where most of the homes are in foreclosure!

I will attribute it to living in a humid climate however after 10 years, I assumed that one would not have anything left that would be salvageable. I was referring to some of the neighborhoods that were abandoned in the States after the collapse. Owners walked away and the banks refused to take possession because the homes were unsellable because of disrepair, accumulated taxes, crime, ect.

Some cases are worse than others but at absolute worst case scenario you still have title to the land, and that is more than a whole lot of people (billions of us here on earth) have. After 10 years of Benny printing and ZIRP, you won't have anything much left at all.

The funny thing about all these Westerner's comments, is it seems no one is asking the Chinese why they are doing it. I have asked, to several average middle-class Chinese (educated but living outside of Shanghai/Beijing).

The answer came back without a second's hesitation:

- if I keep my money in the bank, with the inflation we've had in the country, I loose my purchasing power without doing anything.

- if I keep my money outside of a bank, I have very few options in China: stock market, property...and not much else.

"Stock market is like a casino, and I don't want to put my money there. So it leaves only the property market. The price of my investment might go down, but I still get to keep my property. And there are so many Chinese families that need proper housing that we still have some time before any drastic crash".

So there you have it. It's a property ponzi for sure, but not worse than any other investment strategy in any other market anywhere else in the world.

Only question for them is when does the property market start exceeding the population?

Forget the desert, there is extensive overbuilding even on the outskirts of desirable urban centers like Shanghai. Huge apartment complexes over an hour away from the city (Outer Ring). No industry or factories nearby, no services, and no transportation services (they may eventually hook these areas to the Meto) - just the freeway. These compexes are all over the place and they have been building them non-stop since 2008. Most have few if any occupants and are unaffordable to the general population.

For the last 2-3 years have been wondering when these projects will stop or at least slow down. It is hard to imagine that this is going to end well.

Yes, but you have to build it where people actually want to live. This is in a desert area. The only major desert I know is the Gobi toward Mongolia. We could build houses on the north slope of Alaska and they would not hold value. The point of FREE markets is that builders build based on demand. The demand is by definition where people want to live. A centrally planned economy like this just builds crap to add to GDP numbes and where a couple state planning geniuses think things ought to be. A complete and total waste of resources. China will suffer the consequences of this stupidity.

DosZap is correct. A home in Florida, e.g., left abandoned will last only a few months at most before rot and mildew set in. Everything is fucked. Carpet, drywall, doors, sometimes even HVAC. The owners only alternative is to do what's called "gut to structure" or a complete remodel. So expensive that it's often cheaper to level the building or jingle mail to bank.

A home in the desert will fare better but not by much. When you let the inside of home cook at triple digit temps for weeks on end it still wreaks havoc.

According to Wikipedia, the climate in Dongguan, where the world's largest ghost mall is located, is humid subtropical. It lies south of the Tropic of Cancer. The average temperature is 22.8 °C(73.0 °F) throughout the year. The average rainfall is 1,756.8 millimetres (69.17 in).

This is the worst possible combination of heaat and humidity. The climate plus the what can only be described as "substandard construction practice," e.g., using interior rated sheetrock on exterior facades, along with very shoddy building materials would explain why after only 5 years the mall is literally falling apart.

Some of you may remember this. It was back in 1998 which seems like yesterday but it is 13 years ago??? Remember when Asia blew up? I think the trip mine was Russian bonds. I think this was also during the LTCM blow up. Thailand was amongst the hardest hit. Sort of like Greece now just more productive than GR. There were a lot of skyscrapers under construction and they just stopped. There was no capital and I think all the projects became economically worthless.

I wonder what ever happened to those skyscrapers. They predicted that the climate would destroy them in months. The same thing sort of happened to a skyscraper in Fort Worth during the tornado a dacade ago or so. All the windows were blown out and it was boarded up forever.

Crap, no you're right. One hot mess. At least out here in the dry upper desert if there is a decent roof and there isn't much interior exposure to the direct sun, a house can stay intact without occupancy for a better length of time than many areas of the country. But nothing kills a structure quite like being unoccupied. (Unless it is renting it to a meth head.)

If the world has invested in the wrong things, and China is one of those things, then the bursting of the China bubble may be the greatest catastrophe of all. China’s financial system is a mess, and a major crisis cannot be far off. With the U.S. economy dipping lower and Europe facing its own financial nightmare, China cannot postpone its own day of reckoning. So what will China’s leaders do? What plans have they made?

To give readers some idea of the problem, a recent WikiLeak revealed that the U.S. had advanced knowledge of a secret Chinese missile test last year. In response to this revelation, Chinese Gen. Xu Guangyu told the South China Morning Post that American officials possessed enough advanced detail to suggest the presence of a sensitively placed U.S. spy in China’s rocket forces. According to the South China Morning Post, Gen. Xu said that “if China could no longer keep secret its missile launches, it would not be able to launch a surprise attack on the U.S.”

But why would China want to launch a surprise attack on the U.S.?

In 2005 Chinese Defense Minister Chi Haotian explained that an ailing Chinese economy would produce a social explosion that could sweep away the Communist Party. “If we do not have good ideas,” warned Chi, “China will inevitably change … and we will all become criminals in history. After some deep pondering, we finally came to this conclusion: only by turning our developed national strength into the force of a fist striking outward – only by leading the people to go out – can we win forever the Chinese people’s support and love for the Communist Party.”

To survive the consequences of an economic downturn, the Party needs to lead the Chinese people – as Chi Haotian suggests – “out of China.” This may seem confusing to those who think China is a post-Communist country; but as journalist Richard Mcgregor points out in his book The Party, China is yet a Leninist state. And yes, they really are Communists, though what this means is lost on nearly all outside observers – and somewhat bewildering to the Chinese themselves. The rulers of China keep their Communist goals and objective from public view. They do not like the glare of publicity; and so they banned Mcgregor’s book because he underscored the Party’s control over the army, police, media and big business.

Two things are important to remember about the Chinese Communist Party: first, Communism remains a philosophy set against freedom; second, Communism is ultimately about the elimination of capitalism in favor of socialism (because capitalism opens the way to freedom). This latter point was underscored by none other than Deng Xiaoping himself – and by the Party in its secret conclaves today. But few in the West have bothered to read Deng’s collected works. Neither have they understood the reason for the Communist Party retaining its name and its ideology behind the scenes, where its strategies are meditated in secret.

The rationale behind Chinese capitalism is not to eliminate Communism. The rationale is to fight fire with fire – to defeat capitalism by capitalist means. The objectives of “Chinese capitalism,” as conceived by Deng Xiaoping, were outlined in an article published by the Hong Kong newspaper Cheng Ming on 6 June 1991. Here it was shown that Deng Xiaoping was secretly working to advance Sino-Soviet supremacy while the Americans were duped into giving China everything it needed. After the fall of the Soviet Union, as reported by Bill Gertz in the Washington Times of 21 Oct. 1992, China and Russia signed a pact restoring intelligence ties. From that point forward the Russians assisted the Chinese in their continuing military buildup.

The Chinese Communist goal was clearly stated at the beginning, in 1977, when Deng Xiaoping explained the strategy of opening economic relations with the West. Deng told the CCP Central Committee that they were engaged in “the international united front struggle” which was a strategy about which the “American imperialists” know absolutely nothing. “We belong to the Marxist camp,” he explained, “and can never be so thoughtless that we cannot distinguish friends from enemies.” According to Deng, President Nixon and President Ford were enemies, as well as President Carter. All future “American imperialist leaders” were also enemies. “What we need mainly is scientific and technical knowledge and equipment,” he said. In the future, America “will have no way of avoiding defeat by our hands.”

The strategic thinking of the Chinese Communist leadership holds that as long as America continues to enrich China, and as long as China can build its military power, then peace is workable. But when the economic wellspring runs dry and the Sino-American partnership has exhausted its profitability, then peace becomes unworkable. Rising discontent within China must then be diverted. The natural course would be for the people to hold the country’s leaders responsible, and to remove them from power. Many of these leaders would be tried as criminals, and would lose their heads. The only alternative to this would be war with the United States. This course automatically shuts down the Chinese democracy movement, which would have to choose between China and America in the course of a life-and-death struggle. In such a contest, the Chinese Communist Party automatically wins the assent of nearly all Chinese – including democrats.

And so, the best course for a failing Chinese economy is war. One might ask what kind of war? In a secret 2005 speech given by Chinese Defense Minister Gen. Chi Haotian (titled “War is not far from us and is the midwife of the Chinese century”), a biological attack on the United States was suggested as optimal. “It is indeed brutal to kill one or two hundred million Americans,” said Gen. Chi. “But that is the only path that will secure a Chinese century….” Having already noted that millions of Chinese would die if the Chinese economy collapsed, Gen. Chi explained that the only way out for China was to “teach the Chinese people to go out” (i.e., attack the United States). “We, as revolutionary humanitarians, do not want deaths,” said Chi. “But if history confronts us with a choice between deaths of Chinese and those of Americans, we’d have to pick the latter….”

Worried about the Chinese public’s reaction to the mass extermination of Americans, the Chinese Communist Party conducted an online survey through an intermediary. “[W]e wanted to know whether the people [of China] would rise up against us if one day we secretly adopted resolute means to ‘clean up’ America,” Gen. Chi explained. The survey asked if it was acceptable to shoot prisoners of war, along with women and children. If an overwhelming majority approved of such measures, “then they would approve our ‘cleaning up’ America,” said Chi.

The curious American reader might ask how the Chinese public reacted to the survey. “What turned out to be comforting,” noted Gen. Chi, “is they [the Chinese public] did not turn in a blank test paper. In fact, they turned in a test paper with a score of over 80. This is the excellent fruition of our Party’s work in propaganda and education over the past few decades.”

And so, if China’s economy stops growing, America should expect that its relations with China will deteriorate. This is based on the internal logic of the Chinese political system – which appears to be locked on a collision course with America.

America's strategic nuclear arsenal has been reduced by 90%-or-so and Western technology and productive capacity has been usurped by China. Now via a rather suspicious "Arab Spring", Israel is being placed in a strategic corner likely as part of triggering the global war I foresaw in 1991: http://www.spiritoftruth.org/Thesis/Intro/#4d

Quite frankly, I don't understand the seeming utter futility of the historical course unfolding. Is history HIS-STORY or not? If so, how can the 'Old Enemy' be defeated? Where's the playbook?

Keep telling yourself that. Legends in their own mind such as yourself think they have it all figured out, but all of you operate from the wrong premises, and none of you think you could possibly be the victims of deception.

You've never heard of the 81 Party Congress held in Moscow in 1960, and there's scant information about it online, so it's as meaningless as if it never happened (to fools like you). But it's not meaningless, and in fact it's of dire importance. The agreement reached there among 81 Communist Parties, which you know absolutely nothing about, is perhaps the most important thing you could know.

The hubris that is still extant, even in these times of trouble for the West and the U.S. in particular, is a clear indication to me of the success of the Communist bloc in shaping the opinions of the non-communist world. This idea that it would be suicide for the Communists to attack us now is exactly what the Communists desire we think, and it is a lie.

In the U.S. there are about half a dozen locations in which we have built nuclear silos which house about 1,000 ICBMs, and none of which are hardened to withstand a direct hit from a nuclear weapon, be it tactical or otherwise. Furthermore, the locations of these silos are hardly a secret. Blow hard, blowhard.

The U.S. navy has in its fleet just 14 "boomer" subs, subs which carry nuclear-tipped missiles, and by treaty obligation, only half of these are out of port at any given time. Each carries just 24 missiles, and the location of each sub, if not already known, is easy enough to vector once it rises to an approriate level and releases one of its nukes, at which point the likelihood of it launching another diminishes greatly. There are, incidentally, just two ports which this fleet calls home, one in Oregon and the other in Georgia, and neither location is a mystery to the Russians, Chinese, or anyone else who cares to know, for that matter.

Ah, but we have bombers which can carry nuclear bombs through the air to the enemy, that is the third component of our triad, you shout. Yes, and those bombers sit on tarmacs while the nuclear weapons they are designated to carry sit in aircraft hangars. In the time it would take to arm the bombers the bases at which they are located might very well be vaporized.

The deception that was the "collapse" of the Soviet Union made possible the mass immigration of Russian and other Eastern bloc citizens. Among our new janitors, mechanics, waiters, oligarchs, etc, are an unknown quantity of spetsnaz troops whose purpose is to carry out sabotage and assassination missions prior to the onset of direct hostilities between Communist forces and their targeted enemy. It is not out of the realm of possibilities, and in fact it is the most likely scenario, that a decapitation strike will be carried out against our political leaders and simultaneously our military bases will be attacked with tactical nuclear weapons. Such a coordinated strike would be anything but suicidal for our communist enemies.

It's chilling as to just how easy it would be for a terrorist or foreign nation to take out one or more American cities with a Hiroshima style nuke, or to detonate an EMP weapon and take out the electronic grid. In my opinion it's not a matter of if but when.

If you are interested, check out the podcast with Joel Skousen on FSN from 9/1/2011 titled Preparing for the Next World War. He gives a blow by blow account of how a Chinese sub came up right in the middle of a Navy War game off San Diego without even being detected.

You are actually putting out strategic nuclear warfare as an option for the fucking Chinese to dominate the US?

They would be ANNIHILATED by our response strike. The fucking Russians are NOT THEIR FRIENDS, you freaking moron. And, it's not 19fucking60 anymore, dipshit.

The scenario of janitors going spetsnaz and using TACTICAL nuclear weapons (from where, idiot?) on our military bases...where do you come up with this fantasy shit? Invasion USA? Chuck Norris will stop them.

He's a strategic simpleton. He'd probably fair well at the Pentagon in this day and age. Meanwhile, Kremlin strategists find that Western arrogance and stupidity makes for a very useful working environment. It's much easier to defeat an opponent incapable of seeing their own weaknessess and vulnerabilities.

Cities are for young people, to leave the home fires to immerse themselves in non-family centric socialization. Cities are for the elderly to enjoy benefits and services when they are no longer able, interested, or benefit from the labor of keeping the independant home fires buring.

The Chinese do know what they are doing. Americans fall more into the pattern of John Edwards, al Gores running mate. Who builds one one of the largest homes in north american in a rural setting. Then tells the neighbor to remove the implements of a rural setting.

Johnson, a 56-year old retired landscaper, said the land had been in his family since before the Great Depression. Johnson lived on the property and earned extra income from leasing the 12 mobile homes and an auto repair shop located on the property.

No it's likely strategy psychosis. Like I said you remove trust in banks and government from peoples strategy lists. And they adopt stategies tha aret nuts. The goverment is creating wealthy people that don't trust in the source of the creation. So they are off on a tangent being weird. Or they are building them as a carrot making people think they will one day move in there from their good manufacturing job. But never raising pay enough to make it possible.

Total misallocation of resources by the central planners. The last time China did something on this scale 40 million people starved to death.

Great Leap Forward: Mao forced farms to relinquish equipment to be melted down to try to produce manufacturing equipment to industrialize and modernize. But it was mostly only pig iron and all for nothing. Central planners were too stupid, and too afraid to tell Mao, that pig iron was no good for industrial steel, and now the farmers couldn't farm so 40 million had to starve and resort to cannabalism.

Central planners have no shortage of 'great' ideas, but it only takes one to go wrong to magnify a catastrophe throughout the entire society which is left with no economic diversity for backup. Central planning is fatally flawed for this reason alone. No pun intended.

What gets me is the colossal waste. Of Time. Energy. Money. Building materials. Just such a fucking waste. This is a one way trip for the human race. We will never again have the money and resources to pull off such a monumental cluster fuck. And thank God for that. Nothing left to do now but kick back with a beer and watch as the entire global economic shithouse burns to the ground.

You know the 64+ million houses built but not occupied may be for twofold purposes. One of course is to channel all that dough sitting around doing nothing. Secondly, more importantly, maybe as ready to go housing after WWIII. This particular city that is featured in the video is in Mongolia. Will the U.S. nuke Mongolia? Highly unlikely.

I've been to China. They DO fill up.. By the time they are, there's another 100 new empty cities being built to escort the line the length of the great wall. L'est people forget there are 1.8 billion chinks waiting to fill up condo from dirt floor hut.

Also, China doesn't write derivative contracts the size the US and Europe does for cardboard gypsum sh*tholes in the size of 20 zillion dollars. It is the worthless derivative which fooked the West, not the 40% drop in price.

"And somehow we keep bashing the Fed as the only source of Einsteinian insanity, when it is the same cretins from the Princeton economics department in both the monetary and fiscal arena".....who the hell wrote this?????? Einstein spent the last years of his life living in Princeton, but he didn't associate with any of the wanker academia there, he hated them! He only visited Princeton University once, and that was to sit-in on a Feynman lecture.

"Princeton is a wonderful little spot, a quaint and ceremonious village of puny demigods on stilts... Here the people who compose what is called "society" enjoy even less freedom than their counterparts in Europe. Yet they seem unaware of this restriction, since their way of life tends to inhibit personality development from childhood."- Albert Einstein, in a letter to Queen Elizabeth of Belgium -

Also, Einstein lived very modestly...he would never have approved of Wall Street antics or lifestyle, let alone the paid acedemia support of Wall Street Voodoo Franken-Keynesian Economics.

The Chinese ghost cities and the Russian underground facilities in the Urals were not built with a nuclear war in mind but were built for the pole shift in 2012. The Pentagon's $2.3 trillion in missing funds disclosed on September 10 2001 and the related accounting records supposedly destroyed when Flight 77 hit the Pentagon were used to build underground facilities for the elite to escape the pole shift. The rest of us are up the creek without a paddle -- if the Chinese and Russians and our beloved leaders are correct in their assessment of what is coming down the road.